Welcome to our blog series on the Top Ten Realtor Myths. We took a brief hiatus from the series this week to post our monthly Market Update (click here to read it). Prior to posting that update we busted myth five, that Realtors are generalists and can sell just about anywhere. Let's move on to number four.

Myth: Realtors hold open houses because they are effective marketing tools.

Fact: Realtors hold open houses to find new business.

Open houses are one of the most misunderstood aspects of the real estate industry. Most homeowners see them as effective tools in the marketing of their home. They've been done by Realtors forever and are generally considered a mainstay of the business. Unfortunately, they're largely ineffective.

The National Association of Realtors conducts a survey of home buyers and sellers each year, publishing the results in a comprehensive report. One question in the survey asks buyers where they first saw the home they ultimately purchased. Among the most popular answers were the MLS, yard signs, and the internet. Open houses did not appear anywhere on the list.

Another question in the survey asks buyers which information sources they used in their home search. Interestingly, just under half of all buyers said they used an open house as a source of information. In other words, buyers visit open houses with the intention of learning, not buying.

So, why are open houses so common? Simply put, Realtors hold open houses to prospect for business. For starters, all those buyers looking for information are potential clients. That's why you typically see a registration form as soon as you enter the front door. Additionally, curious neighbors will often visit open houses, allowing Realtors to potentially pick up future listings.

Our primary problem with open houses is not that they are ineffective, or that Realtors use them to generate business, it's that the homeowner is misled to believe the open house is being conducted for his or her benefit. Because the seller believes the open house might actually sell the home, she will spend hours cleaning, de-cluttering, and putting away valuables and prescription drugs. All this work will be done without her ever being fully informed of the risks (stolen or damaged property, liability for injury, potential thieves "casing" the home, and so on.)

Once again, we're not bashing open houses. We're simply advocating full disclosure of the risks vs. the rewards. Realtors should make it clear that, although there is a small chance the house will sell as a result of the open house, it's far more likely the open house will result in new business for the Realtor.

Thank you for reading this installment of our blog series on the Top Ten Realtor Myths. Check back on Monday when we'll bust myth three. As always, your feedback is welcomed!